Discos Knock FG Over Failure To Provide N100bn Electricity Subsidy

Nigerian Electricity distribution companies (Discos) have faulted the federal government over its failure to release the N100bn subsidy on electricity since the privatisation of the sector, Naija News reports.

This is as the stakeholders in the power sector showed further disapproval of the planned takeover/restructuring of five Discos by the Federal Government through the Bureau of Public Enterprises (BPE).

Discos described the move as a backdoor renationalisation of the power firms. They claimed that investors in the 11 Discos were shortchanged by BPE when the facilities were privatised in November 2013.

Naija News recalls the Federal Government through BPE had announced the planned takeover of Kano, Benin and Kaduna electricity distribution companies by Fidelity Bank Plc after the bank initiated action to take over the boards of the three Discos.

The government also announced that with the takeover of Ibadan Disco by the Asset Management Corporation of Nigeria, the bureau had obtained approval from NERC to appoint an interim managing director for the distressed power firm.

Discos have continued to oppose the development and afterwards filed new lawsuits to avoid the takeover by the government and the bank.

It is understood that there is also a division between both parties as they receive commendations and condemnations from power sector experts.

The government had in its restructuring notice maintained that it was restructuring the management and board of Port Harcourt Disco to forestall the imminent insolvency of the utility.

The notice was signed by the Director-General, BPE, Alex Okoh; and Executive Chairman, NERC, Sanusi Garba.

The Executive Director, Research and Advocacy, ANED, Sunday Oduntan who spoke on the development on Sunday said that the association viewed the restructuring to be inconsistent with all the guidelines necessary to comply with the framework of privatisation agreements and the rule of law.

He said: “We believe that it is reasonable to conclude that the resultant outcome has been an expropriation or backdoor renationalisation of the Discos by the Federal Government.”

ANED argued in the statement issued in Abuja yesterday that such renationalisation or expropriation must be viewed through a historical context as necessary for a proper understanding of the performance challenges that the Discos have been faced with since privatisation.

The statement added: “Fundamentally, the basis of privatisation was flawed from the beginning due to conditions that were not met by the Federal Government while expecting the Discos to meet their performance obligations.

“Not only were the investors shortchanged because of insufficient and unreliable data that was provided by BPE to them during the privatisation process, but the government also committed to and failed to deliver on debt-free financial books; payment of ministries, department and agencies electricity debts; and N100bn subsidy.”

It outlined other areas of failure by the government to include its inability to implement a cost-reflective electricity tariff, stressing that this singular unfulfilled condition had led to accrued significant debt and liabilities on Discos’ financial books, as Discos continued to sell electricity below the cost price.

ANED further stated that the government had failed in the private management of the Transmission Company of Nigeria, currently, a government-owned and operated entity.

It said the privatisation of TCN was a major requirement for attracting private investment critical in addressing the transmission bottleneck currently belittling the Nigerian Electricity Supply Industry value chain.

“These commitments have remained largely unmet over the post-privatisation period and have belatedly been partially addressed – too late to rectify current performance challenges.

“While the Discos are not exonerated from responsibility for performance failures, it would be unrealistic to reach related conclusions without taking into consideration the factors that have been listed previously, as well as the Federal Government’s contributions to these challenges,” ANED said.

It added, “Furthermore, there is an established process by which a change of a corporate entity’s board of directors and management occurs. As such, it is with much surprise that the Disco investors awoke to the July 5, 2022, renationalisation or expropriation of the five Discos.”

The association argued that due process was not followed and that the Federal Government, as a 40 per cent minority shareholder, was represented by the director-general of BPE on the board of each of the Discos and was party to all decisions concerning the operations of the Discos.

This article was originally published on Naija News

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